UpdateAsia petchem prices tumble on crude falls, weak China data

SINGAPORE (ICIS)--Petrochemical spot prices in Asia tumbled on Friday, tracking sharp falls in crude prices, on concerns about weakening demand following the release of disappointing economic data from ?xml:namespace>China - the region's key market and the world’s second biggest economy.

China, which also ranks as the second top oil consumer, reported a 2.9 percentage-point decline in its Purchasing Managers Index (PMI) to 50.4%, indicating a slowing down in its manufacturing activities.

At 18:44 Singapore time (12:50 GMT), US crude for July delivery fell by $1.72/bbl to $84.81/bbl, while BRENT crude had a steeper decline of $1.98/bbl to $99.89/bbl.

Downbeat data on oil consumption in the US and continued concerns about the unresolved debt crisis in the eurozone are keeping players across the commodities and equities markets worried over the prospects of the global economy.

Asian equities market suffered some losses on Friday, with Japan’s Nikkei 225 shedding 102.48 points or 1.20% to 8,440.25 at the close of trade.

Shares of Japanese petrochemical majors also fell, with Mitsui Chemicals down 4.02% and Mitsubishi Chemical 2.9% lower.

The bearish sentiment rippled through the Asian naphtha market, with prices nosediving to an 18-month low of $803-806/tonne CFR (cost and freight) Japan.Asia has a long supply of naphtha – a condition that is expected to be worsened by the absence of a major regional buyer – Formosa Petrochemical Corp (FPCC).

The Taiwanese producer shut its biggest cracker in Mailiao, with a 1.2m tonne/year ethylene capacity, on 31 May because of weak demand and poor margins from olefins.

Meanwhile, the aromatics markets were also dragged down by falling energy futures, with benzene at a five-month low and toluene hitting its lowest level in six months.

Further downstream, the purified terephthalic acid (PTA) market was also hit. Asian PTA prices plunged to a 19-month low, with buying indications at $990/tonne CFRChinaMainPort (CMP) for cargoes of South Korean origin. It was the first time in one and a half years that prices fell below $1,000/tonne, according to ICIS.